Competing Technologies in the Database Management Systems Market

Abstract

In this paper, we study the dynamics of the market for Database Management Systems (DBMS), which is commonly assumed to possess network effects and where there is still some viable competition in our study period, 2000-2004. Specifically, we make use of a unique and detailed dataset on several thousand UK firms to study individual organizations' incentives to adopt a particular technology. We find that there are significant internal complement effects - in other words, using an operating system and a DBMS from the same vendor seems to confer some complementarities. We also find evidence for complementarities between enterprise resource planning systems (ERP) and DBMS and find that as ERP are frequently specific and customized, DBMS are unlikely to be changed once they have been customized to an ERP. We also find that organizations have an increasing tendency to use multiple DBMS on one site, which contradicts the notion that different DBMS are near-perfect substitutes.

Keywords: Database software, indirect network effects, technology adoption, microdata

JEL Classification: L86, O33